Scammers are cashing in as savers look for investments offering higher returns than rates offered by cash in the bank.
Investors yielding to the temptation of rich rewards lose an average of almost £6,000 each; according to research by consumer champion Which?.
A survey of members showed around 10% were cold-called by scammers looking to rip them off, and half of those who took a gamble lost £5,887 each.
Which? says the top four rip-offs doing the rounds are:
Carbon credits are certificates that large firms can trade off against carbon emissions.
The scam works by crooks offering the chance to invest in green schemes that offer carbon credits in return for cash. These credits can then be traded on markets – but these markets are closed to small investors, making the certificates worthless.
The Financial Conduct Authority warns the number of carbon credit scams is rising and are outside money protection schemes as they are mainly based overseas.
Some genuine, regulated carbon credit schemes are available, but check out investment with the FCA before parting with any cash, says Which?
Boiler room share scams
Boiler rooms are call centres set up by bogus share dealers to sell worthless shares on the promise of high returns.
High pressure sales strategies, like limited time offers and bulk discounts, make the deals sound tempting.
Genuine financial firms are not allowed to cold-call and many boiler rooms are based abroad beyond the reach of regulators. Again, they fall outside of compensation schemes if something goes wrong – which it probably will.
Again, Which? suggests checking out the firm with the FCA before investing.
Fine wine is not a corking deal
With this scam, sale people sell overpriced or non-existent fine wines by hinting of high investment returns.
The FCA says only experienced investors with knowledge of the market should consider putting cash into fine wines.
The industry is not regulated, but the Wine Investment Association (WIA) trademark can indicate approved merchants, but scheme membership does not give formal protection, or access to any financial compensation scheme.
Diamonds in the rough
Just like fine wines and boiler room shares, scammers make inflated promises about high potential returns of investing in the jewels.
Which? says one investor spent more than £56,000 on three diamonds that were actually worth £20,000.
The diamond market is unregulated and even experienced experts disagree on a diamond’s value.